Asian Stock Market: Risk-off escalates ahead of US Inflation, oil prices back below $90.00

• Asian equities have dropped sharply as investors have turned risk-averse ahead of US Inflation.
• China’s inflation has increased to 2.7% but remained lower than expectations of 2.9%.
• Oil prices have slipped back below $90.00 on inventory buildup reported by API.

Markets in the Asian domain are displaying a vulnerable performance as investors have turned risk-averse ahead of the US Consumer Price Index (CPI). Asian indices have trimmed sharply despite lower consensus for the plain-vanilla US inflation. As per the market consensus, the annual US CPI is expected to shift lower to 8.7% from the prior release of 9.1%.

At the press time, Japan’s Nikkei225 tumbled 0.78%, China A50 plunged 1.19%, Hang Seng dived 2.05%, and Nifty50 eased 0.28%.

Investors have preferred to trim their positions ahead of the US inflation as the cost pressures are expected to scale down. No doubt, the forecasts are lower but upbeat US Nonfarm Payrolls (NFP) has indicated that the inflation rate could surprise on the upside. Whether the cost-push inflation releases lower or maintains its status quo, Federal Reserve (Fed)’s stance would remain unnerved.

Chinese indices have declined sharply after the release of the inflation data. The National Bureau of Statistics of China reported a higher Consumer Price Index (CPI) at 2.7% than the prior release of 2.5%. However, the annual cost pressures remained lower than the expectation of 2.7%. The monthly data remains in line with the estimates of 0.5%.

The inflation universe constituent, which measures the average price change received by the Chinese producers, the Producer Price Index (PPI), remained extremely lower at 4.2% than the forecasts of 8% and the prior release of 6.1%.

On the oil front, oil prices have failed to establish above the psychological resistance of $90.00 as the American Petroleum Institute (API) has reported a buildup of crude inventory by 2.156 million barrels. A consecutive buildup of oil inventory indicates that the demand for oil is gloomy. Apart from that, a promise of more oil pumping by the OPEC+ is already weighing pressure on the black gold.